Morocco plans to boost investment

Rabat, October 14, 2009

Morocco plans to expand investment spending 20.4 per cent next year to prop up the economy to grow 3.5 per cent and offset the impact of the global downturn, the finance minister has said.

'The draft budget for 2010 is aggressive... to promote growth and counter the repercussions of the global economic crisis,' Slaheddine Mezouar said.

The government expects the economy to expand by up to 6 percent this year, almost the same rate in the previous year, as the country garnered its highest cereals crop in 50 years.

The farming sector accounts for up to 17 per cent of Morocco's gross domestic product and is the main employer.

The government envisages a budget deficit of 4 per cent next year, the same projected deficit level this year, Mezouar added in a statement after a cabinet meeting on the budget draft.

It expects investment by the state and state-owned firms to rise to MD160 billion ($20.82 billion) next year, up 20.4 per cent compared with this year's projected investment, Mezouar said.

The government envisages inflation at 2 per cent versus 2.9 per cent projected for this year and average oil price at $75 per barrel.

To boost consumption and alleviate poverty, the government plans to spend MD20 billion next year to build roads, subsidise electricity and other anti-poverty schemes in rural areas, Mezouar said.

The government plans to lower income taxes for middle class and subsidise food to spur domestic consumption and sustain growth, he added.

The government cited tourism, exports, expatriate remittances and foreign direct investment among the country's economic pillars of growth which were be hit by the fallout of the global crisis this year and might not rebound early next year.

Morocco's textile exports to Europe, its main market, are expected to slow by up to 10 percent this year, according to official estimates.

Tourism growth is expected to slow this year and next after a record 8 million tourist arrivals in 2008, according to industry officials.

Tourism accounts for 8 per cent of the country's gross domestic product and is its largest foreign currency earner.

The government expects the draft budget to be endorsed by the parliament later in December as it enjoys strong support in the legislative body. – Reuters